- ASML expects sales growth in 2019 despite challenging environment and proposes to raise dividend by 50%

VELDHOVEN, the Netherlands, January 23, 2019 - ASML Holding N.V. (ASML) today publishes its 2018 fourth-quarter and full-year results.

Q4 net sales of EUR 3.1 billion, net income of EUR 788 million, gross margin 44.3 percent
ASML has signed a Memorandum of Understanding with Nikon to settle patent dispute
2018 net sales of EUR 10.9 billion, net income EUR 2.6 billion
Due to a fire at a supplier, the expected impact on Q1 2019 sales is around EUR 300 million, which is expected to be largely recovered in Q2
ASML expects Q1 2019 net sales of around EUR 2.1 billion and a gross margin around 40 percent
ASML proposes a 50 percent dividend increase to EUR 2.10 per share

(Figures in millions of euros unless otherwise indicated)
Q3 2018 Q4 2018 FY 2017 3 FY 2018

Net sales 2,776 3,143 8,963 10,944

...of which Installed Base Management sales 1 695 719 2,538 2,685
New lithography systems sold (units) 51 58 173 207
Used lithography systems sold (units) 2 6 24 17
Net bookings 2) 2,200 1,587 9,358 8,181
Gross profit 1,336 1,393 4,020 5,029
Gross margin (%) 48.1 44.3 44.9 46.0
Net income 680 788 2,067 2,592
EPS (basic; in euros) 1.60 1.87 4.81 6.10

End-quarter cash and cash equivalents and short-term investments 2,948 4,034 3,288 4,034


(1) Installed Base Management sales equals our net service and field option sales.

(2) Net bookings do not include High NA EUV orders. Q3 bookings include 1 EUV system shipped in Q4 to collaborative Research Center (imec). This system is not recognized in revenue.

(3) As of January 1, 2018, ASML has adopted the new Revenue Recognition Standard (ASC 606) and Lease Standard (ASC 842). The comparative numbers have been adjusted to reflect these changes in accounting policies.

Numbers have been rounded for readers' convenience. A complete summary of US GAAP Consolidated Statements of Operations is published on www.asml.com

CEO Statement

"Our fourth-quarter sales came in above expectations to wrap up a record 2018 in terms of sales and profitability. The past year was also crucially successful in terms of technology innovation, fueling our growth in the coming years. During Q4, we received five EUV orders. We have customer demand for 30 EUV systems in 2019 and these shipments will include the first volume production systems to DRAM memory customers. We expect that chips produced on our EUV scanners will start to become available to consumers and enterprises in 2019.

With regards to the markets that we serve, our customers responded late in Q4 to slowing demand in their end-markets by delaying deliveries of some of our litho systems from the first half of 2019 into the second half, in order to balance supply and demand. For the full year, the Logic segment is expected to be the growth driver, remaining on track to invest strongly in technology transitions and production capacity for our customers' most advanced nodes, which will drive demand for our EUV and immersion systems. In addition, we continue to see solid demand for shipments to China. Taken together, we reiterate that we see market demand that supports yet another sales growth year for ASML in 2019, with a significantly stronger second half versus the first half. We see a similar pattern in our gross margins, with lower margins expected in the first half of 2019, and we expect to increase to our longer-term trend line by the end of the year.

Despite some uncertainty in the current environment, we remain confident about our sales and profit targets for 2020 and beyond, as we communicated at our Investor Day in November, underlined by a proposal of a 50 percent increase in our dividend," said ASML President and Chief Executive Officer Peter Wennink.

Nikon settlement
ASML has signed a Memorandum of Understanding with Nikon to settle its legal dispute over alleged patent infringements that were initiated by Nikon. Therefore, ASML has recorded a provision in its 2018 accounts. This has a negative impact of EUR 131 million on gross margin in 2018.

Q4 2018 Product and Business Highlights

In our DUV lithography business, the TWINSCAN NXT:2000i ramp-up continued. We achieved a record level time-to-maturity at Memory customers. We reached a high level of reliability within two months after install, compared with six months for the previous generation.
ASML successfully introduced three new options for the TWINSCAN XT:860M KrF scanner, aimed to increase the productivity for both thick and regular resist applications. For the latter, more than 6,000 wafers per day were successfully demonstrated at a customer site.
For 3D NAND customers utilizing warped wafers, we delivered the first upgrades with an Advanced Wafer Clamping System (AWACS) to increase the range of wafer deformation that can be processed on both the XT and NXT platforms.
Our Applications portfolio has continued to see strong adoption in all segments. Highlights include significant adoption of our Yieldstar 375 at Memory manufacturing customers and the introduction of new technologies from our Brion and HMI product groups that together result in substantial OPC model accuracy improvements.
In our EUV business, we have announced the NXE:3400C, specified at 170 wafers per hour and with >90 percent availability. The system will be available to our customers in the second half of 2019.

Outlook
Due to a fire at one of our suppliers of electronics components and modules (as announced in a press release on December 3, 2018), work in progress and part of the inventory was lost. Due to the integral cycle time of around one quarter for these modules, we expect ASML's first-quarter sales to be negatively impacted by approximately EUR 300 million, which we expect to largely recover in Q2, with the remainder expected to be recovered in the second half of 2019.

For the first quarter of 2019, ASML expects net sales of around EUR 2.1 billion, and a gross margin around 40 percent. R&D costs of around EUR 480 million, and SG&A costs of around EUR 130 million. Our target effective annualized tax rate is around 14 percent.

Dividend Proposal
ASML will submit a proposal to the 2019 Annual General Meeting of Shareholders to declare a dividend in respect of 2018 of EUR 2.10 per ordinary share (for a total amount of approximately EUR 0.9 billion), compared with a dividend of EUR 1.40 per ordinary share paid in respect of 2017.

Update Share Buyback Program
As part of ASML's financial policy to return excess cash to shareholders through dividends and regularly timed share buybacks, in January 2018 ASML announced its intention to purchase up to EUR 2.5 billion of shares to be executed within the 2018-2019 time frame. ASML intends to cancel these shares after repurchase, with the exception of up to 2.4 million shares, which will be used to cover employee share plans.

Through December 31, 2018, ASML has acquired 7 million shares under this program for a total consideration of EUR 1.1 billion.

The current program may be suspended, modified or discontinued at any time. All transactions under this program are published on ASML's website (www.asml.com/investors) on a weekly basis.

AND
Nikon, ASML and Carl Zeiss sign agreement to settle all litigation

TOKYO, Japan, VELDHOVEN, the Netherlands and OBERKOCHEN, Germany - January 23, 2019 - Nikon Corporation ("Nikon") (TYO: 7731), ASML Holding N.V. ("ASML") (NASDAQ: ASML) and Carl Zeiss SMT GmbH ("Zeiss") have signed a Memorandum of Understanding relating to a comprehensive settlement of all legal proceedings over patents for lithography equipment and digital cameras.

The Memorandum of Understanding is a binding agreement that concerns all pending disputes between Nikon, ASML and Zeiss in Europe, Japan and the United States, including at the U. S. International Trade Commission. The three companies expect to execute a definitive settlement and cross-license agreement and dismiss all legal proceedings between the parties in February 2019. The terms of the Memorandum include a payment to Nikon by ASML and Zeiss of a total of EUR 150 million (approximately 19.0 billion Japanese Yen*). Furthermore, the cross-license agreement contemplated by the Memorandum includes mutual royalty payments of 0.8% over the sales of immersion lithography systems for 10 years from the signature date of the parties' definitive agreement.


* Based on an exchange rate of 1 EUR = 125 yen

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